Memory Allocation to Parallels

We run Windows Parallels virtual computer on our MAC OS X.
I continue to receive an error that we do not have enough memory. I cannot figure how to allocate more memory from my MAC side to the Windows side.

Are you receiving the "not enough memory" error from Mac OS X, or from Windows?

It seems that you have allocated 2GB of memory to your Parallels Windows virtual machine, and that you're running on a Mac system with 3GB of RAM. Is this correct? If so, you may be allocating too much memory to Windows, leaving only 1GB for Mac OS X to consume after that.

The message is from my Windows. My MAC side works really well, if it were my choice I would choose to run bootcamp and not deal with Parallels. But my husband wants Parallels which is causing the problem and I cannot seem to get any support for this program anywhere.

The error is:
"The screen resolution in the guest OS cannot be set because it is low on video memory. The display may not be optimal. Please increase virtual machine video memory. To increase amount of video memory shutdown the virtual machine, set new virtual machine video memory size (Edit Configuration->Memory->Video Memory)."

When I do the recommendation the maximum I can put my Video memory to is 64 MB.
In my memory Options the Main memory: is set to 2048 MB (max it can go to).